Dedication of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

The guidance of my professor is very important in my hardworking, that’s why I get more then what I had in mind. Throughout my academic career and while making this thesis my parents and professor encouraged my very well. My hardworking is not too much but my parents and my professors appreciate me. I am lucky I got such diligent supervisors’. When I had avalanche of question and I answer them flawlessly with the help of my supervisors and the prayers of my parents. No matter how much I try, when my professors is not presents, and I also can never count all of the people , my parents , my professors that helped me to face all the challenge in my life. 

Abstract of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

This paper focuses about the Saudi Arabian context that is related to the internal audit. Current practice of internal auditing practices are explore in this paper, on public sector organization in Saudi Arabia, and in the public sector determine the present state of the internal auditing practices, as well as how it is influenced on the performance. This paper also talk about internal audit in Saudi Arabia also involves the development for auditing, on the competence focus on the internal audit, for the internal audit support of management, operations of internal audit, as well as the paper mainly focus on the relationship among the associations audited along with external auditors. 
A deep insight is provided by this research that Saudi Arabia business is influenced by the five year business plan for the government development. That type of plan usually gives the benefit to the private organization instead of government. In Saudi Arabia, within the government association, examine the internal control system along with function reporting.  In this paper the research is also about that how the companies get benefits from the internal auditing practices. For this research primary and secondary data is used and it also helpful in finding the accurate results that has been researched. For the analysis of the research in this paper we used the software named as SPSS. We analyzed graph as well as table that was made with the help of questionnaires.

Chapter 1. Introduction of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

In the very beginning of twentieth century, the development in business organizations and their increasing economic growth led the organizations to take control over their business activities and operations. With the passage of time, the contact between management and subordinates was lost due to which situation in business management becomes little worse.  Internal auditors, were therefore, appointed the task to take control over the operations and activities of their business organizations. Thus, they started reporting their activities of organizations. Apart from that, they were also appointed to keep check on the routine financial and operational activities and analyze them in an analytical way (Chaudhari, 2017).

Good governance is one of the interesting topic to talk about. The term good governance means a government free of corruption. Transparency international Indonesia (TII) reported in its annual report that the factors that trigger corruption very prominently in the develop countries is the bureaucratic process speed (Vallabhaneni S. R., 2018).

When there are irregularities in the county government expenditures then the need for internal audit becomes necessary.  Several cases had been noted that include the misuse of public funds to laid down procedures in the usage of such funds.  Public fund has been utilized without knowing its value (Moelle, 2016). Critical need of internal audit is required when such irregularities are encountered by the county government. Sage publications publishes that the importance of context of governance and control is attached to the internal auditing function (Sage Publications, 2015).

Several reasons necessitating the internal audit to a governance. Government officials are held accountable utilizing resources; approach to which public purposes. Nicholas stated that the money being used from the citizens may not have courage with the information provided by the government officials and may need assurance from and independent function. In the relationship between the government and its citizens an element of credibility of the financial reporting, performance results, compliance, and other measures arises from the above factors by the internal audit function. This is due to the contradiction of different interests between the officials of government and its citizens. In this circumstance the internal audit is held the responsibility to keep check the government officials whether they are working according to the citizens wishes and interests (Nickell & Roberts, 2014).

1.1 Background of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

Internal audit works independently and objectively that unravels the organization advices and suggestions to achieve their desired objective at optimal cost. It provides opportunity to improve the operation of organization and helps them to minimize the chances of risks that can devastate company. According to the Cascarino, the companies need to account the protection of the assets so that there could be reliability and the exactness of the secretarial records for which internal audit will play its role (Cascarino R. E., 2017).

As internal audit is a system therefore, it has some effectiveness and that is why recently internal audit is taken into consideration all around the world. Moelle stated that, Effectiveness of internal audit unit in the public sector is taken seriously by the top management because its inability to perform not only impairs the image of an organization. It is also possible that internal audit can file an incorrect report and the reasons for such are mainly the absence of auditing tools such as standard internal audit manuals and other several factors including lack of detailed audit work plan, poor reporting structures, lack of professional independence, unlimited scope of work, presence of unqualified auditors and lack of growth prospect. According to the International Professional Practices Framework (IPPF), internal audit can be defined as, “An independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes” (Nickell & Roberts, 2014).

Internal auditing of the countries is based on the legal and cultural environments that means that this is conducted within the governments or companies that specifies with the purpose, size, complexities etc. (Hussain & Whitlock, 2013). The primary objective of the internal audit is to understand and focus on the assistances that is related to the management members so that companies can be effectively analyzed and companies or employees can be given appraisals, recommendations and comments etc. There are four major benefits that the management gains from an effective internal audit function (Elbardan & Kholeif, 2017). These benefits include the provision of a basis for judgment and action, exposing of the weaknesses in control and performance of organization, recommendation of the improvements, providing effective counsel to managers and boards of directors on the solutions of business problem’s, and supplying information that is accurate, reliable and useful to all levels of management (Vallabhaneni S. , 2013). Internal audit also assists the organization in achieving various relevant functions. In the elaboration of such statement Hussain and Whitlock stated that,” The internal auditors should be in apposition to review and appraise the soundness and adequacy of the accounting, financial, and operating controls, and promote effective controls at reasonable costs.”

The internal control focuses to make sure as well as established policies, plans procedures, laws and regulations could have a significant impact on the company’s key operations. According to Fountain, “Internal auditors believes to safeguard assets and when appropriate, as there is total evaluation of the company internal assets and appraise the economy and efficiency in which the resources are also employed.” (Fountain, 2016)

Last but not the least, ELbardan has discussed briefly about the internal audit and why the internal audit department is important for any organization. The internal audit department helps the organization to perform functions in such a way that the accuracy of the financial statements increases and the errors that occurs in the statements can be mitigated. The internal auditors evaluate the performance of the corporation and assess whether the corporation it meeting its set standards or not. Overall the internal audit department improves the performance of an organization.” (Elbardan & Kholeif, 2017).

1.2 Internal Auditing in Saudi Arabian Context of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

In Saudi Arabian context, Internal audit has concentrated more on accounting and propriety transactions. Until 2004, there was no legal necessity for internal audit function. It was the Resolution No 235 (2004) that proclaimed that all organizations that are subject to audit by the General Audit Bureau (GAB) are required to establish an Internal Audit Function (IAF). Despite of that there are still many organizations that are not obeying the resolution and working without a proper internal Audit Function. Contradict to this background, this paper explores current practice of IAF in Saudi Arabia’s public sector organizations, with the intention of determining the present state of internal auditing in the public sector, and how its performance is influenced. This involves a consideration of the development of internal auditing in Saudi Arabia, concentrating on the competence of the internal audit, management support for the internal audit, internal audit operations, and interaction between audited organizations and external auditors.

In Saudi Arabia the king is the head of the state. In Saudi Arabia the culture is highly influenced by Islamic laws and the individuals who live in the country have to follow the rules and regulations which are established in the light of Islam. In Saudi Arabia Majlis al Shura play significant rule in the formation of national and international policies. However the king is head of the state who takes all the major decisions regarding the country and its policies. However the members of the Majlis al Shura have the authority to change the decision made by the king by providing king the actual facts. The culture of Saudi Arabia is different from other countries who are located in west. 

Another main and important subject, the Royal Decrees, who are made on the stage with the appointment and removal of Deputy Prime Ministers and Judges of the Islamic court. Every individual minister and the heads of departments within the domain of a ministry have the  full decision rights, on their own and make laws on those matters which are related to their responsibilities, while keeping In mind the golden principles of islam, and Royal and Ministerial Decrees. The accounting, audit profession and regulation of the organizations is done by the ministry of commerce that itself. The five years government development plan that influence on the Saudi Arabian business. Such plans has led the development of private sectors that has severely influenced the kingdoms business environment. In particular, the service and agricultural sector.  In addition, certain effective initiatives and incentives were introduced in order to make proper improvements to the education as well as proper training for the workplace. The five year plan for 1995–2000 included four major goals of the government.

First one on the list was balanced Budget. Secondly, further privatization. Thirdly, the substitution of international labor by national labor. In the clarification of last goal, about 5.5 million of civilian workforce was estimated in the end of 1994 of which 51% were internationals. In the upcoming five year plan it was decided to at least have 75% people who are citizens; so that instead of benefiting others, Saudi state should be flourished.

In 1974, a law, law of certified accountants, came into being that was the first one to recognize and regulate audit function. Articles 2 and 3 set the conditions for all individuals to apply for the post as an auditor in external with the Ministry of Commerce. Saudi Gross National Products (GNP) increases as a result of enormous demand for oil. As a consequence of which more industries were developed and Saudi became one of the industrialized countries in the world. The need was to mitigate the issues related to business. Thus, two very important conferences were arranged by the king of state. The first one in 1983 and the other one in 1983. After the second conference, official report was filed to the Ministry of Commerce to identify problems in the areas and providing feasible plans for the development of accounting profession and external auditing standards. After deliberate analysis, the Ministry of Commerce agreed to the establishment of three different separate bodies committees. Each one of it will be working differently. One of them will deal with the development of financial accounting standards. The other will deal with the standards of external audit. An issue arouses for the Ministry of Commerce’s Decision No. 692 in year 1986 which was published in two separate parts. first part was based on Accounting, Objectives and Concept.

In 1992, Saudi Organization for Certified Public Accountants (SOCPA) was established for the development of accounting and internal audit inside the Ministry of Commerce by Royal Decree No. M/12. However, it ensures that the SOCPA’s committees that are working as technical will work to advance the level in the profession of accounting and audit of externals standards in Saudi Arabia.  SOCPA consists of thirteen persons and is regulated and lead by the Ministry of Commerce through its legislative including the Minister as well as Deputy Minister of finance and the Deputy Minister of commerce. With such leaps and bounds growth it necessitates for controlling internally, evaluation of management and monitoring them. There were no government initiatives nor incentives to speed up and develop audit of internal, neither has the SOCPA been made efforts in audit of internal development. Later on, IIA chapters were initiated in order to take control and manage the internal audit. The Dhahran chapter was working within the Aramco Governmental company. The main objective was to screen out and elect new members of IIA chapter so to have more members working and make it to the top and to inspect the CIA examinations so that the internal auditors can be enabled and registered in the region to qualify as CIAs members. By such practices, the chapter had about 75 members by 2000. During its service, it has also encountered two main problems. There were legal restriction on its activities and operations. Dharan chapters helped the system to take CIAs examinations twice a year. As a result of which people sitting in the examination were rapidly paced up and now approximately thirty-five candidates sit in the examination at one test, Saudi nationals has gradually augmented to 35% who are taking tests. According to statistics, people passing the examination at first attempt is very small. Only a few can accomplish such goal. During 1996-2000 only 6 of the total candidates passed at first attempt. Such examinations played a very significant devotion in the rising of audit of internal function.

In 1992, the Jeddah chapter was owned by the internal audit function. The idea was to promote internal auditing in the airlines of Saudi so that airlines should also be benefitted by the audits. It expansion enables them; accounting at King Abdul-Aziz University. Doing such resulted in the significant rise of number in chapter due to the involvements of students. In 1994, the total number of members reached 110. Later on, chapter received an award for such rapid rise in numbers of members. It encountered different problems during its expansion because it didn’t received permissions from the government to run and work as a formal body. In Saudi, it is necessary to run the formal organization. In 1997, failing in permitting the permission resulted in the end of the chapter.

1.3 Research Objectives of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

The research objective is to:

Examine scope of internal audit function and its priorities

Examine the internal control system and function reporting in the governmental organizations in Saudi Arabia.

To provide a better understanding that what benefits companies are getting through internal auditing practices.

1.4 Research Hypothesis of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

Hypothesis 1: Internal auditing practices have a positive impact on the governmental organizations’ performance or not. (Based on questions Q5-Q 12) (See Appendix 1).

Hypothesis 2: The quality of internal audit function improves the performance of governmental organizations or not; based on questions (Based on questions Q 13-Q 18) (See Appendix 2).

Chapter 2. Literature Review of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

2.1 Internal Audit Experience of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

As per the studies of Badara & saidin (2013) for ensuring the objective which is being achieved by the organization is played vital role for making sure to achieve objective, same as for the achievement of objective audit is used for contributing about internal audit experience. On mark of this, the main purpose of this study paper is to have an experience between the internal audit and audit experience for the effectiveness in line with public sector society.  In the public organization sectors internal audit will have first-hand experience for the effectiveness for the literature evaluation paper.  Authenticated is important for the paper. Being informed about the factors, which is take part to affect the internal audit effectiveness as it, will follow the four vital parts of process within the organization.

Teaching (guide the staff of organization the way to work better), motivation (to improve the performance ensure audit.) deterrence (make it sure to discourage the points which distract the organization ) process improvement (make in ensure though audit process that everything is working in a way as it should be) hence for the effectiveness of internal audit empirical and conceptual ways to wide-ranging study for the purpose of internal audit efficiency, furthermore, on the aspect of internal audit needs more focus on all-inclusive study for bother empirical and conceptual by reflect the few literature for the gauging of auditing efficiency and particularly for the public groups of sectors, which needs to completed.  Same as Private and public companies bother are getting increase the demand of audit involvement. It is due to that good practices of audit are prevailing for better hands on audit practice to get the best output from audit will have the impact to audit success.

They are able to response positive to their customers’ needs and their hopes, requirement and needs are there as these will help to aware the different standards of auditing practices. In public sector the internal audit effectiveness and experience of audit present the relationship of which is being present in the paper.  It is being considers and implanted by this paper that experience of audit is independent adjustment; which is being reviewed of conceptual literature specially at public sector.  Since the limitations are there for the paper, it is being extending the literature of the paper by contributing to information for the effectiveness of internal audit not only limited to public sectors.

Moreover, with the relations to experience to audit being recommended as further research may needs to be carry out for the effectiveness of internal audit in sector of public, internal audit effeteness. Moreover, it is needed for contribute to paper in public sector as more anxiousness is being carry out for private sector as per this paper which also flops to reflect the effectiveness of audit on account to relation between the internal audit effectiveness and audit experience. Notwithstanding the detail as this is paper is used for the going PHD research for thesis. Moreover, by using he different type of analysis amount different type of counties validate the research in different public sector of organizations, furthermore additional research is needed for the deportment for the effectiveness of internal audit (Badara & Saidin, 2013).

2.2 Impact on Governance Apparatus of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

As per the studies of AL-Janadi, Rahman, & Omar (2013); the objective is to obtain the internal and external corporate supremacy device by the impact on governance apparatus for the disclose as voluntary in Saudi Arabia. The model involves 87 associations from the Saudi Stock Market. The data are gathered from the yearly reports for the available budgetary years 2006, 2007. It is found that corporate organization segments accept a work in giving quality declaring. Most corporate organization instruments, especially non-official companies, board gauge, CEO duality, audit quality, and government proprietorship, have a basic duty in giving quality firm presentation. The disclosures of this examination give confirmation on the reasonability of corporate organization as a part of seeing ability to give customers attractive and sufficient information. The revelations of this examination have imperative effects for power controllers, approach makers, financial specialists and distinctive customers of reports who have an excitement for best practices of corporate organization.

The corporate organization structure has started to set up strong roots in the Middle East markets, particularly from the soonest beginning stage of this period. Besides, it is further maintained by a couple of all-inclusive affiliations which are normally involved with corporate group. the OECD had left on educating the corporate groups which is being action in the Middle East and North Africa (MENA). The OECD – MENA movement is away to streamline the organization structures and proceeding with corporate organization practices in MENA countries. Besides, it remains away to improve the practices and condition for eagerness for the zone. Appropriately, the code of corporate organization was developed in Saudi Arabia in year 2006. Edible exposure of information is important considering the way that without such data, it isn't possible to properly condemn the odds and risks of endeavor.

There is weakness about the idea of firms (e.g. to the extent the option of their favorites and peril of cash streams) and their securities. As such, financial authorities ask for info to study the arranging and vulnerability of current and upcoming cash streams with the impartial that they may respect firms and settle on other attempt choices. Furthermore, extra revelation will help examiners with decreasing the likelihood of settling on the wrong endeavor decisions. Moreover, the change in the earth and the postponement in business multifaceted nature are hitting forth climb to additional solicitations for information (FASB, 2001). Relations satisfy this interest by purposely giving extra information in their yearly reports. The revelations on corporate organization parts reveal that internal and outside corporate organization.

Feedback is being provided to the regulators of Saudi Arabia in the stock market with the concern for the rank of practice of corporate governance for supplying adequate information. Furthermore, as per this study it helps to share the data for the effeteness of governance mechanism in colporteur aspect. It also has the research in the study, as this will help to improve the regulators which will force the corporate governance mechanism which will reflect the inefficacy of the the committee of audit. This kind of improvement can be implemented by setting rules which will not only clear the audit committee roles.

The one active avenues to have the future research is that to highlight the study and expend it to other countries of Arab, as these are the countries which are underneath the GCC umbrella or can be choose from other Arabic countries of difference reigns to have their comparison. Other areas of research are to have the further attribute of the additional effectiveness of examination for corporate governance based on disclosure of information on voluntary basis, like other ways of structure ownership like concentration ownership, formal ownership) (Al-Janadi, Rahman, & Omar, 2013)

2.3 Managers of Public Sector Companies of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

According to Alzeban & Gwilliam (2014), the internal audit had great influence on company. Auditing focused on the effectiveness of the company and it was related to the performance of the company. Saudi Arabia considered one of the largest and major export countries in world. The effectiveness of company has great impacts on the leadership and management. According to Alzeban & Gwilliam (2014), for analysis the data collected was based on 203 managers of public sector companies. The data was collected from 239 internal auditors of public sector companies. The data collection was done from 79 Saudi Arabian companies. Analysis of data collected was measured for multiple regressions. The analysis was done among IAE and the selected five principal as factors. Internal audit in any company have the record and previous data related to company performance. Internal auditors of companies hold the strong position and play vital role in managing the company affairs. The analysis supports the management for IAE and helps in achieving the goals. IAE results showed that effectiveness of the internal audit. The results showed that internal audit had strong influence on managing affairs and management hold strong perspective. The support of management helped in understanding the internal environment of companies (Alzeban Abdulaziz & Gwilliam David, 2014).

According to Alzeban & Gwilliam (2014), hiring was done on regular basis in public sector companies. It was determined that management is responsible for hiring and training the staff in public sector companies. Management was responsible for hiring the trained and experienced staff. In public sector companies, management was responsible for providing the all kind of resources and sufficient resource for getting the desire results. The management of companies was responsible for establishing relationship among the internal auditors and external auditors. The external auditors are independent and they have strong position to check the companies’ real position. The status of companies determine in market with their level of growth. The public sector companies were responsible for increasing their worth. The internal environment of companies determines their position in national and international market. The management of these public sector companies in Saudi Arabia has strong influence and the effectiveness of decision-making process.

According to Alzeban & Gwilliam (2014), the governance of companies played important role for holding strong position in market. Companies monitor the market and make internally strong for solving the problems and issues. The internal environment of the companies supports the management to make right decision. The internal audit of companies presented the clear view and audit was considered as mirror of companies’ performance. The traditional governance style of companies was changed with change in technology. Moreover, it was determined that specific culture is suitable for companies. The labor supports the companies’ decision by working on right direction.

According to Alzeban & Gwilliam (2014), for internal unity and progress it must be noted that core religious beliefs. The internal and external environment of companies favors the performance of company. The regional business environments have strong effects on the productivity of companies. Saudi Arabia was included in most developing country and country environment favor the business activity. GCC countries favor the business and it was due proactive measures taken by governments. Arab countries were strongly in favor of business activities. The internal audit of all gulf countries especially Saudi Arabia shows that country is on the way of progress. Companies were covering the path of development and progress. Companies have strong and busy schedule of working throughout the year (Alzeban Abdulaziz & Gwilliam David, 2014).

Saudi government is supporting the companies for generating income as government want to reduce dependence on oil money. The effectiveness of IAE is considered more important as it show the growth rate. The investors deeply absorb the companies’ condition and it was good for country on international level. The mangers of public sector companies were responsible for managing the demand of supply. The factors have strong impacts on performance of companies. Public sector companies have strong influence of IAE and especially in Saudi Arabia. The study determines that the nation who is fair in their internal audit is reliable for investment and business activities.

According to Alzeban & Gwilliam (2014), monitoring played a vital role in measuring the companies’ effectiveness IAE. The effectiveness of companies was based on how effectively internal audit is done by the management. The monitoring systems of companies are more focused and have complete guidance. The financial compliance was the most valuable thing and it has strong impacts on performance. The auditing of internally influence can be determined the direction of companies in internal and external market. However, in the recent past year’s companies’ management played significant role for progress or development. The study determine that internal consulting among the management have wider role for managing the risk. The factor of risk attack on the performance and destroy the effectiveness of internal audit.

Companies hold the strong financial background but due to poor internal audit losses all the assets. It was good saying that labors are the real asset of company. Risk management in companies has strong impacts and effects even after hard work. Companies’ leadership and management internally and externally manage or handle the risk situation. It was determined that how companies were affectively measures the internal auditing and how it effectively share in performance. The performance and effective of internal audit were the two factors that have strong influence on psychology of management. Management spends thousands of dollars for training the staff and for handling the verse situations. Internal auditors have free hand up to some extant in companies but have external audit to evaluate the functions.

Saudi Arabia has considered in those countries that have strong auditing system on base latest technology. Technology has changed the style of working and measurement of performance. The impact of internal auditing on companies performance can be seen in companies’ internal report. The internal income report of companies can be seen and it holds previous earning. For preventing the scam in companies attitude of employees are very important. The attitudes of employees were based on development. The manners of employees were also important for measuring the effectiveness. Gender also played vital role and it was important to know that how male management effectively deliver the performance. The nature of culture was also important to know that how it was important for these companies. Internal auditing hold link with performance and it was important for all the performing companies. The inquiry and investigation hold the strong effectiveness related to performance.

According to Alzeban & Gwilliam (2014), it was determined final issues in companies are more important and effective for determining the performance. Saudi Arabia developed a strong policy and hold for determining the performance. The effectiveness of internal auditors was unique and has strong influence. The effectiveness of internal audit is characteristic that hold perspective of growth. The economic revival of companies holds the uniqueness and development. Saudi Arabian companies supply the oil and major sector is construction. The data collected from companies were based on internal audit report (Alzeban Abdulaziz & Gwilliam David, 2014).

According to Gwilliam David (2014) determined that it was not easy for the companies to hold strong position market. The companies were holds the tight system of selling and purchasing. The sale and purchase of goods, items or products is done form various regions of world. Companies were running their business setup in various regions of world and delivering their products across the world by shipment. The gain and loss was part of business but internally it lead toward the fraud. The light checkup and slow process become one of the reasons to increase disruptive behavior internally and externally. The issues of performance with companies are related to the ground working condition. Companies have long struggle to come on that stage where now these thirty-nine companies were now leading in region.

According to Gwilliam David (2014) there are various kinds of factors that have strong influence on the performance of companies. It was determined that the major factors was that management was not professional trained to meet the new global challenges. Therefore, new management was hired form the various countries that have experience to run the large companies setup. One change that was introduced by the companies that local educated persons also trained under the supervision of these experienced managers. Now with the passage of time these persons have skilled and professional working experience. Auditing was one of the major field and that hits the company performance. Management learned from harsh and crisis situations and now performing in these companies. Management are running the large setup and delivering effectively. The companies hold the strong relationship with transferring the funds. Internal auditing create environment of internal responsibility. Responsibility was major concern with performance (Alzeban Abdulaziz & Gwilliam David, 2014).

According to Alzeban & Sawan (2013), governance played vital role progress and development of companies. Leadership holds vital role and considered the backbone of the companies. Leadership was involved in decision-making process and the delivering the market analysis. Governance controls the major issues internally and taken the decisions. The management also implemented the decisions taken internally. It was the major responsibility of the management to hold strongly and have deep knowledge to control the fraud. Internally audit in thirty-nine companies in Saudi Arabia make the management responsible for their actions. The actions taken internally and externally based on the behalf of management (Alzeban & Sawan, 2013).

According to Alzeban & Sawan (2013), with the advancement in ideas and technology, it becomes more important to have advance knowledge. The greater frequency of decisions making were improved the status of company in market. Internal auditing makes the responsibility of management that it should be done with great care. One of the major factor for doing the internal audit in companies as the auditors have the strong knowledge. It was determined that white color crime involves the neat and clean fraud in companies. Information and knowledge are both strong pillars to hold the tight and strong internal audit. Information related to financial matters holds strong expertise. The fraud done by the financial experts in companies of large setup can be exposed by hiring the external auditor. External auditors have strong knowledge and know where the financial managers make the fraud. It observed that on daily basis listen those financial frauds done by the managers in companies. Therefore, companies do not depend on the internal audit done by the financial managers.

The internal audit was affected by the managers, breaks the companies’ codes easily, and run their stealing business for company accounts. One of the major reasons is that companies do not capable of installing the new management system on time.  It was found that lack of necessary equipments in companies also become reason for stealing or fraud. The lack of latest equipment in companies mean have less chance to control the stealing conditions by managers and it was failing of internal system of company (Alzeban & Sawan, 2013).

According to Alzeban & Sawan (2013), the problem with internal audit was that management has not capacity to hold these scams. In Saudi Arabia, managers have less capacity to meet the global challenges in previous years and companies hired the staff from European and American. It was observed that companies have now using the local talent and making the strength of managers to cover all kind of issues. Now it was determined that thirty-nine companies were using the audit of GAB. Once these companies were going towards failure as the internal audit system and on other side, companies want to expand their business in all regions. It was observed that as Saudi companies hold their position in market and strengthen the internal audit system shareholders come. The shareholders also invested in these Saudi companies and become partners as companies were working effectively in regional and global market.

According to Alzeban & Sawan (2013), it was determined that previous model was not working well and then it was changed with the latest model. The changed model holds the strong auditing features and it was recommended by financial representative or called as financial controllers. The model was tested before installing in market mechanism and managers decide it was right or wrong. It has good features related to auditing and makes the auditing as strong function. Controllers have deep knowledge about the financial matters and it was easy to hold the scam and fraud related to finance. In public sector companies in Saudi Arabia, the roles of internal auditors have strong function in companies’ performance.

2.4 Direct Link with Performance of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

According to Endaya & Hanefah (2013), the measurement of internal audit was full with challenges. Internal auditing have a lot of problems and it was not easy to control all the influencing factors. It was observed that internal auditing has direct link with performance. Performance is directly associated with audit of company. Performance is determined that the selected companies have tight working condition. The effectiveness of internal audit can be determined as companies hired the experts as financial matters are very important. It was determined that the performance of management hit the balance sheet and income of companies. The crucial function of management was based on the smooth working of labor. Ignoring the internal audit was becoming more verse and handling the maters verse. Management of Saudi Companies knows the importance of internal audit and management deals on it on first priority (Endaya & Hanefah, 2013).

According to Endaya & Hanefah (2013), it determined that the aims and objectives of the Saudi companies are very clear. Companies want to hold the regional and international market and it can be only done when companies have clean audit system. Internal audit control the company conditions and it hold the strong working conditions. Internal audit has strong impacts on management and it was a serious problem. The advantage of internal audit was that it helps in running the smooth working. Companies work daily and deal the assignments of products. The significant impacts on companies were that Saudi government holds the strict laws related to fraud. It builds the strong position of company in market and company may hold or get top position in regional market. The major thing was the company’s products and products mean a lot of movement of goods or items. Products sale and purchased on higher level and management control the system.

 According to Endaya & Hanefah (2013), it was determined that communication played important role for increasing the performance. The impacts of internal audit on performance have strong impacts. It was clear that communication hold the strong position in companies. The products were delivered on time and recovery of payment was very important. The management have clear vision and it was followed the aims or objectives of company leadership. Communication is the key to handle the issues and problems internally. Management hold the important position in companies and it has deep knowledge especially related to financial management. Internally management controls all the issues and focus on resolving the problems. It was determined that technical competence needed the essential support. Internal auditing has essential requirements for effective measuring of financial problems. The sufficiency of internal audit was important to tackle the issues or problems as management was more concerned about the training programs (Endaya & Hanefah, 2013).

2.5 Practicing Illegal Activities of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

According to Arena & Jeppesen (2016), it determined that with the variation in internal audit report it has impacts on the performance. Its mean that management and labor performance both. Management is like engine of train and as it was clean perform the works also works with full potential. As the management is involved in corrupt practices it has bad impacts on the labor. In public sector companies in Saudi Arabia, management are directly involved in corrupt practices its mean that company higher level practicing illegal activities. The workers or labor of companies notice the illegal practice they also involved in corrupt practice. This mean that corruption diverts the real intention of management and production loses. Company soon or lately on its last stage and become bankruptcy. The values or beliefs highlight the importance of the performance. Performance was retained or gained with the help of management. The social responsibility of management is to handle the negative impacts and release the tension of management. Professional attitude include the major parts of management.

According to Arena & Jeppesen (2016), it was determined that attitude included in that things that have strong impacts on companies performance. The behavior of management belongs to companies and it handles the biggest issues or problems. Management controls the practice variation and highlights the environment. The environment play vital role for control or measuring the level of performance. Management develops the strategies and plans for working internally and externally. Professionally managers make themselves responsible for loss and gain. Companies want professional dominance and avoid any kind of ambiguity in companies. The operational activities of companies reveal their performance as on time delivery of goods or material shows it performance. The cover the short fall and meet with the dead lines in short time is the real goals of management. To become more powerful and leading in region need more efforts and need full attention. Financial accounting need the extra ordinary skills and professionally attitude. Auditors create the good image of company and make them a smart or famous brand in world. Auditors remain in offices but hold the important position and can change the game of ruling in regional and international market (Arena & Jeppesen, 2016).

According to Razi & Madani (2013), it determined that information technology has played important role in managing the various matters in industry. It was determined that management need to advance skills and technical knowledge to lead in market. Information technology and used of advance software’s in auditing and financial matters become important. Saudi companies were using accounting management applications, market analysis software’s and practicing the modern variation factors. Corporate governance is facing the issues and news becoming hot with capturing the fraud by top management by using the financial software’s. IT applications in internal auditing save the management form error, fault, or failure. IT developed the trusted and reliable application for internal auditing as it has both positive and negative impacts on performance (Razi & Madani, 2013).

By Rendering to the research by Su, Lee, Tsai and Lu the basic purpose of this writing is to know the view of the of the bankers of Malaysia about the impact of the several techniques or methods and fraud prevention on the Islamic bank of Malaysia. Researchers distribute the 148 questioner in the Islamic banks of Malaysia to their staff including officers and managers to find out their perceptions about this study. According to the findings of this questionnaire the application and software used by Malaysia banks to prevent the risk of fraud are proved to be more effective and operative. In the intervening time the most effective techniques for preventing the fraud when evaluating independency are considered as the protection of the password, bank settlement and reconciliation and the inside analysis and improvement. Hopefully this research will be proving advantageous for the participators to know and understand the value effectiveness of currently using techniques of to secure the bank of Malaysia from threat of fraud.

To check the improvement and optimization of government operations the government examining tem has elaborate by itself to check out economy, legitimacy, effectiveness and efficiency of how the numerous branches of administrative are consuming their assigned resources. It is to be noted that potentials and abilities of experience and usefulness of the auditors have great influence on their performance. The researchers held a survey in Taiwan among the 50 % of all government auditors to endorse some practical factors to auditors to increase their performance and to develop more appreciative about the factors which give strength and enhance the performance of audit authorities. The findings indicate that professional responsiveness, skills, abilities and attained knowledge of auditing has greatly influenced by the experience of any professional audit and it results as to increase the abilities effectiveness of the audit professional judgment. We also noticed that problem solving capabilities perceived skills the involvement of resources also has great influence on their performance. The aim of this writing is to recommend several managing strategies and guidelines to the audit authorities of the Taiwan to improve their abilities and efficiency.

Under the strong upsurge of globalization, deviations are supplemented by advance technological inventions, pecuniary liberalization and growing responsiveness of an active nationality, all of which in turn bring about incredible experiments challenges to the Taiwan government in many forefronts such as economic growth, governmental reform, social welfare, anti-corruption, tax revenues, pension plans and insurance. These issues and challenges are really influenced for polices and strategies of the government, for the events of international level or for the consistency of economy. The service provided by the auditor’s authorities is not only reflected and impacted by the functions of government, the perception of the citizens of Taiwan about government and the executive branches has also deep impact on auditors. To raise the value of resources the performance of auditor is a great way to increase it by their dedication it will also beneficial for the growth of economy (Su, Lee, Tsai, & Lu., 2016).

2.6 Internal Auditing Legality and Regulation of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

In the recent time the government of Taiwan has started paying attention more on legality and economic regulation of the financial operative and competent performance of auditing so government is showing more concerned with it as it is complicated, tricky and complex comparably. To certify the progression in a fast moving work environment is the reason behind to highlighting and promoting the network of development, it also enables the Taiwan government to maintain a mentor system. To maintain the mentor system of great quality the government has used the strategy of mutual learning. As by mutual learning the people can raise their skills and abilities by sharing information and experience it also increase the enthusiasm, knowledge and connections.

In the audit of the branches, it is noticed that there is more uncertainty of the structure, which is not good. Moreover, most of the studies show that the reason behind it is the much stress in environment of working which cause workforces loss by understand this factor it is necessary to sort it out as these factors has negative impact on the performance of the employees which automatically result as the loss of organization. To sustain the employees for long term organizations should introduce some alluring and attractive future look and also enhance the learning opportunities to retain them. 

Inclusively the result of study is that the performance of audits is highly influenced by the self – efficiency. To improve the performance and skills of employees the employers should make strategies to improve the self-efficacy of the employees it will be advantageous for both the employees and corporations’ performance. By helping the each other to fulfill the objectives and aims will be prove vindicated for them. Organization can held the motivation and consoling lectures, announce the rewards for good performance to improve the self-efficacy of employees. By the proper guideline training, understand them to learn challenges and by leading the development activities organization can boost and motivate the employees to increase their work efficiency.  According to the survey to develop the internal network corporations the employers should arrange the meetings to discuss and share the information and experience regarding to company and should ask by employees to give create ideas to make further strategies.

 To improve the quality of employees they should also provide platform for knowledge sharing and educational training. Organization should understand the employees that they are playing primary role in company so they are important to them. Make them believe that if they will be dedicating with their organization will lead towards success  and as a result they will also get advantage as their facilities, salary and rank also increased by knowing that work environment is favorable for them they will definitely enhance their performance because of satisfying mind. When an employee feels that they have resources and indecency and future securement they will show their full potential (Su, Lee, Tsai, & Lu., 2016).

To lower the auditors morale is not at all so to ignore it we have not write numerous factors for example to maintain balance of the audit reports, value back to state fund, number of employees who are admonished,  or some other endorsements. To measure and quantify the position of audits is somehow challenging therefore we recommend further study using alternate methods to define and quantify their performance and to legalize and elaborate our research (Su, Lee, Tsai, & Lu., 2016).

2.7 Auditors as government respondents of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

By conferring the research 2014 by Goh, Cousins, Elliot, Gilbert and Aubry there are better analysis the advantages of the internal auditing despite the fact that several independent educational institutes like universities, some public agencies and other private sectors are also dedicating to contribute with the government of the state. In the evaluation, this operation is characteristically run by the team of government for evaluation internally, auditing assistances and by the contractors control and employed by government for evaluation. The units for evaluation are rapidly increasing in the numbers by the governments of worldwide hence for hence the evaluation of the government structure is supportive and cradle. Furthermore in this research it is also clarify that regardless of the corporation’s good intension of developing the units for internal evaluation, they raise the threat of own selves to be locked down except there is huge demand and value the quality internal evaluation.

In the same way with similar from similar difficulties the Canada and United States are going through as the internal units of evaluation of Australia are specially placed at the public sectors therefore they are also facing the problem recurrently lack of the skills for evaluation, lack of employees and shortage of required resources. In the age of 1990s, the auditors and units of evaluation were minus distinct as compare to now in Canada due to the operation from administrative of government in federal departments with 50% audits and the unit of evaluation in a merged unit.

The auditors of the organization have stated that the government respondents sector had shown less dedication to rate their corporation as compare to the other corporations according to the commitment to ECB (Cousins, Goh, Elliott, Aubry, & Gilbert, 2014).

According to the research held in the 2014 by the Lubbe and Coetzee on the very prominent issue internal auditing according to this writing the character which is played by the auditors and internal auditing help to diminish the factors that can be risk for corporation they have minimized it but not least. This purpose of this writing is to explain the development and expansion of the model that can be proved helpful for the auditors of internal units to perform their challenges and duty with success. To the development of this model the writing and research have been taken from academic literature, norms and values and the practice of current business and several other papers was used. After it was verified and tested by a specific scenario and the result was prominent from the head of corporation of internal audit from corporations of South Africa. The outcome of the research which is inter alia gives the positive view in the support of model. On the other hand it is notified that the strategies and policies which are currently using by the corporations to manage the risk factors in the internal auditing department are not strong enough to rely on them so there is requirement for the model to generate the operation of organizations significantly.

In the testifying of model for risk management of internal audit by using the method of the model the internal audit engagement was re – performed which had been executed also before. The outcome of the practical was in the favor of model as it ensures to increase the efficacy and performance of the employees. It is to be stated that with the use of model less number of audits will be used but more findings will covered (Coetzee & Lubbe, 2014).

According to a research held in 2014 by Nickell and Roberts they lay stress on the examination of the ethics and the operations of performed by internal audit in a business corporation. Tremblay and Everett have been explain the way which is used by the internal auditors by probing the employees liked to clinch a moral vague, if not disputed.  They organized profound interviews and examine the autobiography of the institute selected by them named as IIA institute of Internal Auditors. There is an article to examine the role of the operations done by internal audits and to further discover the internal audit and ethics. The organized model of hypocrisy confronts the rational model of decision-making. The auditors, which are fulfilling the task internally, are considered to work in weak sovereignty. The internal auditors are answerable towards the management of the organization. So this rule makes the culture and moral of auditors weakens (Nickell & Roberts, 2014).

Chapter 3. Methodology of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

Primary and secondary data is used in Saudi Arabia for recent research, for the initial source for the research, firsthand information is necessary, as on a specific topic you are understating the writer thought for the pacific subject and even took participate in it. Scholarly reteach articles, diaries and books are the primary source of data. Data which is being used as on primary part which includes Secondary research articles don’t have data to share the theoretical principal. Further, for research secondary data is used for discussing the information, share the summary, or any other information share in details for this happening in other way; in some of the cases the writher does not contribute for occasions. Secondary source is used for getting the view of subject or to highlight the main source. For the Doctoral level of working it is mandatory to catchphrase for adding the resources in annotated bibliography except for any specific reason. 

3.1. Secondary Data Analysis of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

Secondary analysis used to intensive for this type of research, so it made is available for the relevant topic of analysis, but to use the data in other ways the flexible method is being used to the utilize the relevant data. For the inspection of the research, the internal auditing role is important to evaluate the performance of Saudi Arabia Government organizations.  Secondary analysis is being absorbed for the systematic technique and empirical exercise. But  For the help of the research secondary analysis is stepped up by the evaluative and analysis steps so effective material is being collected and primary data is being evaluated (Kempinski, 2013) for the collection and analysis of secondary data, on systematic procedure effective practices by internal auditors for the government organization performance is fixated (Konopinski, 2013).

In Saudi Arabia focus is on performance of Govt. organizations is by the internal auditing and this is being used for secondary data analysis, and science research is being used for the collection of information existing data is used. For our studies, the researchers have already researched the topic relevant to us, for the utilization of data benefits is being taken from existing data. These studies have already been evaluated by the researches, which are being direct related to the performance of govt organization working in KSA, and being internal audited, along with partial resources and time frame.

Primary data is being utilized by focusing on secondary analysis. The studies were investigated by the secondary sources which are in the field of internal auditing system for the Saudi Arabia co. that reflect the implementation of internal auditing system. From the researchers the present interpretations are being collected by relevant data. Research which is being directed for pacific part of interest in past are collected for analyzing for took the research. Furthermore, the existing data is being focused for valuation steps.

Present study of research design is self-explanatory that means relationships will be explained between the variables and relationships, furthermore the relationship will be explained for the methodological operations in explain relationship. The attributes are of distinctive nature by explained research which used to emphasizes the impact for the variables to each other’s thought existing theories for reviewing and literature for the issue.

3.2. Process of Secondary Analysis of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

According to this research, focus is also on the qualitative research on the organization of Saudi Arabia which is being conducted research by the researchers, but Literature review is being focused by the internal audit. Hence that would be the examination for the qualitative research. The interpretations and words are being focused by the research methodology in Saudi Arabia organizations that how the effects for the principal of internal auditing are being affected. In research paper explanation and description is provided. Furthermore, social realism is being focused by the event and processes for the better understanding of the culture of the company.

Studies have been gown through the substantive research phenomena in details hence qualitive approach has been analysis further the social phenomena studies be done by the internal effects of auditing. Qualitative research is being focused in this work, so have the fruitful internal stories on the specific subject and have the deep understanding for dept. analysis of the situation.

Qualitative analysis is being focused by the secondary research as this helps to arrange the opportunities which is needed to show the latest theoretical framework for the research and hence the research impartial and questions analysis. Furthermore, enhancing opportunities are there which demonstrate of research objectives and analysis the questions. Furthermore, the internal auditing practices are being focused by the Saudi Arabia organizations for their development of auditing., by the way of data production the revelation and findings are being noticed. 

3.3. Management of the Primary Data of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

The existing material is also being studied by the organization of Saudi Arabia organization, characteristics are being find for the question to answer as by which ways the system is being consider by the companies for auditing. Statistical relations are being considering to be focused by the qualitive methods. Also, it helps to find out reason of answer and their justification with arguments. In the studies and literature, the qualitive research is being considered, considerations of the methods of experimental are also take in to part. 

Primary researches are used to be based on the secondary researches, as the experimental methods are being focused in detail by the researchers for the data which is very efficient and are able make available great opportunities for the topic of the research to obtain the good results. The unexpected findings are being analysis by the primary studies and disclosure so the data of quality qualitative research based on the developments of the theoretical, to know the results questionnaire survey used to done (Vartanian, 2011). For this research sampling technique is being used. This is the probability sampling technique for random sampling that output results hence this also help to increase the accuracy of the results which has been researched. Moreover, this is vital to reflect the selection of the employees in the research.

This mentioned research has been done on the base of an idea called positivism. Term positivism refers to a system which deals with the facts and figures that can easily be tested and approved scientifically. In positivism we gather knowledge from our observations experiences and experiments. Positivism only deals with the quantities. Initially positivism was accepted and followed around the globe by the researchers or the research works and was one of the best known research methodology till the mid of the previous century. But with the progress in the field of research and invention of modern methods of research the positivism was started to be criticized because of the limitations of this system. After the mid of the previous century researchers have realized that this methods is unable to meet the demands of the research of modern era. Positivism only deals with the research of object but it is not helpful in subjective research work, which means this method is only reliable for quantitative research work. 

The international researchers are focusing on the institutions of the Saudi Arabia they could have an idea about the influence of the culture on the changing plans and strategies of the institutions to manage the systems of internal audits. To understand and analyze the system of management of any organization, researches have to focus on the managerial practice of that specific organization.  

The results of the different questions and observations have helped to understand effects of the management on the internal auditing systems. Answers have been collected of the questions through emails and posts. Mostly the results are compiled on the answers of the questions related to managerial system and transparent procedures of the institutes. ( Vartanian, 2011)

3.4. Data Collection and Evaluation of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

For this research work, only those researchers have been selected who have a good idea about the moral, ethical and social norms and values of the Saudi Arabia and the cultural and social traditions of the institutes and organizations working in this part of the world.  The researchers  who were participating in this research work were very professional and focused so that they can observe the activities of the organizations and can perform quantitative analysis as well. The secondary research is done by the observation and analysis of the primary data collected by the researches.  

To understand the goals and the answers of the questions for this research work, the researchers have concentrated on plans and strategies of the organization that how these organization have implemented the rules of auditing internally. These approaches have proved very helpful for the research workers to understand the cultural values and norms of Saudi Arabia. In this study, researchers have focused primarily on the persons who are responsible for the management of accounts, by adopting this approach researchers have enable themselves to analyze the basics of the Saudi companies more closely and deeply. 

To get more and more accurate and exact results from the information collected for the researcher purpose, the basic tool is data analysis, if we adopt right technique for data analysis then we will get accurate result from the collected data. For this research work we have adopted the technique called descriptive and inferential data analysis. This technique is proved to be very helpful variables of demographic.  In this technique we can calculate percentages, can find out the tendencies of the data and we can draw graphs as well. We use a software called SPSS for the analysis of the data, graphs and tables are made based on the questionnaires. SPSS is very efficient software because it gives us very reliable results in very short period of time. These types of software have the life of researcher very easy. 

One more positive point of this method is the technique called inferential data analysis technique. This technique is helpful for the assessment of the regression and correlation of the data. Regression and correlation have very important effect on the variables in the research. Variables of dependency and independency can be accessed efficiently in the regression analysis. In this research, the use of modern analytical tools and techniques make this research very  reliable and the results of this research would be very realistic and because of accurate results this research, it is easy to implement them practically.  

3.5. Strengths of Secondary Analysis of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

In the second part of this research, our secondary goal or research is to find out the ways these Saudi organizations are implementing the laws and rules of the internal audit system. The secondary research is directly depends upon primary research for the data collection. So the primary research provides the basic and reliable research data, both quantity and quality wise. And with this reliable qualitative and quantitative data, primary research provides us with accurate and reliable results. 

3.6. Limitations of Secondary Analysis of the Impact on Internal Auditing on the Performance of Governmental Organizations in Saudi Arabia

As we have many positive aspects of this research, there are many flaws and draw backs of this research as well. First and foremost flaw of this research is that, our results are directly depends upon the answers given by the workers of companies by the questionnaire. There are possibilities of human mistakes and biasness, which affect the results. There is possibility of errors of other tools and software.

One more drawback is that most of the researches are usually done on the larger scale of internal audit systems but this research has done on very small scale, and this can cause a big variation in the results. Other drawbacks includes the documentations which may be not authentic or lack proper information regarding research. 

The first and earliest data acquired from research is called primary research. Because of these modern software and techniques the research results can be obtain more rapidly and these results are proved to be more reliable and practically more implementable. This research is more concerned with the analysis of the qualitative data obtain from the Saudi companies.

This research is done on the bases of the qualitative and quantitative data of the Saudi companies and the implementation of the internal audit systems. This research shows that there is tendency in Saudi companies to change their internal audit system and management techniques.